ASSIGNMENT

Global Strategic Alliances



Table of Contents

Introduction1

Discussion1

Conclusion3

Global Strategic Alliances

Introduction

A strategic alliance between the firms is actually an agreement to do business together beyond the normal dealings, but fall short of partnership or merger (Wheelen and Hungar, 2000: 125). These alliances vary from an informal handshake to a very formal detailed contract between the parties stipulating their rights and duties. These alliances can be between two firms or among companies more than two in number. An example of a six company alliance is the Apple, Motorola, Sony, AT&T, Philips and Matsushita forming, General Magic Corporation in order to develop software on Telescipt Communications. (Jacobini and McCreary, 1994: 12). This paper discusses the reasons why strategic alliances are doomed to failures in most of the cases and what elements are there to look for when dodging failure in the pursuit of success.

Discussion

The benefits sought from these strategic alliances are many that lure many companies to engage in such projects. These benefits include new market entry/growth strategy, obtain technology, reducing cost, improving quality, reduce financial risk, sharing findings of research and development, and even gaining joint competitive advantages. However, these mergers are not happily ever after tales. Some of these strategic alliances are doomed to failure and cost the participants severe loses. It is needed to evaluate that why 60% of these strategic alliances fail (Kalmbach and Roussel, 1999: 1-8).

The reasons of these failures in strategic alliances vary from situation to situations, however, some of the most common pitfalls are, clash of cultures between/among the participating firms; lack of trust; Lacking of clear objectives and objectives; management teams lacking proper coordination; difference of operating procedures; realati0onal risks; performance risk; and moreover a risk of generating a future local or global competitor.

The problem that is often faced in these strategic alliances is the ...